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Tata Steel beats St on volumes, realisations

Thursday, 14 November 2013 - 9:20am IST | Place: Mumbai | Agency: DNA

Higher volumes across all regions and better realisation across India and Southeast Asia helped Tata Steel to post a robust second quarter performance, group CFO Kaushik Chaterjee told reporters.

Tata Steel p osted a consolidated net profit of Rs917 crore against a net loss of Rs364 in a year ago quarter and a Bloomberg estimate of Rs383.6 crore.  Net profit, however, declined sequentially from Rs1,139 crore.

Deliveries jumped to 6.48 million tonne (MT) from 6.07 MT a year ago. Contribution of Rs180 crore during the quarter from subsidiaries also helped.

Tata Steel’s consolidated operating margins jumped to 10% from 7% a year ago, mainly on prices increases taken in India and Southeast Asia and higher volumes.  The company took a price increase of Rs1,500-Rs2,500 on an average in the quarter ended September in India. T V Narendran, managing director, who took charge recently, said the company also went for a hike of Rs 1,500 in October. 

Despite second quarter being seasonally weak, Tata Steel managed to have volume growth both in India and Europe. Sequentially, Indian deliveries improved from 2 MT to 2.04 MT while in Europe deliveries jumped 10% to 3.46 MT.

Flat products, mainly used in automobile industry, contributed significantly to volumes.

Narendran said flat product sales increased 35% year on year in Q2. However, long products’ sales of the company remained under pressure as construction demand remains poor in the season. Narendran said the company’s long product operation in India is undergoing 60 days of shutdown from September.

Surprisingly, when other Indian steel players exported more in Q2 to take advantage of rupee depreciation Tata Steel has chosen to focus on domestic market.

“We have commitments to our domestic customer which we are barely able to fulfil sometime. We do export, but we don’t need to export to fill up our bills,” Narendran said.

Its European operations showed significant improvement despite it being a weak quarter.

Stabilisation of operations at its new Port Talbot facility helped the company to have highest like-to-like quarterly production in past five years.

Chatterjee said he expected demand to pick up in H2 and recent price hikes to sustain. Demand in Europe is also expected to pick up.

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